Demagogic debate gives no answers

Allister Heath was Editor of City A.M. for six years up until June 2014.

Allister Heath

HOW unedifying, how disappointing, how distressing. Last night’s “debate” on the economy was the worst yet. It was littered with errors, lies and incorrect claims – from all three leaders. The assumptions were astonishingly retrograde; it felt at times as if we were back in the 1970s, such were the collectivist, class war and protectionist attitudes on display.

With Greece and several other Eurozone countries on the brink, and Britain’s deficit a crippling £163bn a year, it is clear that the biggest, most pressing question is not how to spend yet more borrowed money – it is how we can save money and grow the economy, salvage our public finances and prevent a collapse. How much did we get about this? Astonishingly, very little. David Cameron was slightly (albeit briefly) more forthcoming but in the main, while there was plenty of vague talk of spending reductions, the huge black holes at the heart of all three parties’ plans were not addressed.

The criticism made by the Institute for Fiscal Studies – that the parties have not been forthcoming about cuts and tax hikes – thus remains as valid today as ever. To make matters worse, Gordon Brown and Nick Clegg kept accusing the Tories of wanting to cut too much, while the questions (with one exception) were all about what politicians could provide for the electorate. As a result, the election will in part at least be a con: we are being asked to vote for parties that are refusing to reveal a lot of what they will do after the election. There will be massive cuts and huge tax hikes – yet these will not have been ratified by the electorate, which means that they will not be perceived as legitimate.

The only part of the debate that added to the public’s understanding was the section on immigration – it was also the only area where there were substantial differences between the parties and where these emerged, warts and all. The Lib Dems believe in an amnesty – it was clear Nick Clegg’s body language that he knew that he had to downplay this, undoubtedly his most unpopular policy.

On the economy itself, the quality of debate was weak. The assumptions shared by David Cameron and Nick Clegg appeared to be that all banks (even prudent ones) and the financial system are evil, the services sector is inferior to manufacturing (“actually making things”), foreign takeovers are bad and imports of Chinese goods even worse. The protectionist and demagogic undertones were deeply worrying.

Meanwhile, Gordon Brown kept claiming that the Tories’ modest plans to cut £6bn of waste – less than 0.5 per cent of GDP – was “removing money from the economy and would shrink the economy”. This is total nonsense given that the savings would be used to prevent the bulk of Labour’s planned national insurance hike.

Yet Cameron’s claim that “we should tax the banks to get our money back” is wrong, on many levels: the Lloyds and RBS bailouts are now in profit for the taxpayer, thanks to the increased price of the shares; as long as they continue rising the entire direct cost in terms of taxpayers’ money for all other interventions – including Northern Rock and any losses on gilt purchases on quantitative easing – will also have been paid for. So there is no need for an extra tax if clawing back the bailout is the aim.

The best way to choose who to vote for next week is to ignore yesterday’s debate completely. It was way too depressing.